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tv   Key Capitol Hill Hearings  CSPAN  April 1, 2015 5:30pm-7:01pm EDT

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the questions and crisp the more we have time. >> [inaudible] with fiscal policy but are you thinking of? are you talking about $200 billion of investment but to get that recommendation i will point to though last few years that is the worst of the macro perspective with other cuts and tax increases is a major drag on growth that fiscal policy takes a point and a half of the growth
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rather than supporting growth and i argued as chairman during that time that short-term fiscal policy ought to be more attentive to the needs of recovery those concerned about fiscal sustainability should be in no long term framework but that fiscal policy of though whole ethic is even more of a burden on the fed to keep interest rates low to full employment >> you will get your answer. [laughter] but i could give fate fiscal recommendation.
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[laughter] fed is not beyond my scope. >> can you talk about what to reduce the global imbalance to weaken the currency? what leverage and with those currency levels so for the following reason no chance it will be excepted. oldfield the economists can tell the difference with the exchange rate and monetary policy have not sure a technical legal document could do that. and i don't think there's anything wrong with monetary policy.
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with the given economy even with the exchange rate. the with the perspective of the trade partners the exchange-rate movements is offset to not export though weakness so is good if others are doing fiscal monetary expansion. costs i don't recommend putting that into the trade agreement. but i can tell you as a participant in many international meetings it was the constant discussion to do evaluations and reviews there isn't a vehicle stick the countries to respond to diplomatic overtures to see
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counter-productive to global economy. we need to highlight those imbalances with those international meetings to put the pressure on countries to achieve a better state of balance. >> please wait for the microphone. >> reaching full employment how low do you feel of the 5.range? where is full employment?
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>> i don't know when number and those without a search of a with sometimes groping with those real wages of they are approaching full pointed. it is even more complicated them before. it used to be the only number to let cab but now there are many demand -- dimensions of underemployment. to change over time to make an assessment. with best estimate of the sustained rate of unemployment highway gather that it has fallen quickly
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has reached 5.5% but nobody has that number -- is there anyone in the back? estimate the chinese have made a concerted effort to make or prominent currency. with those wounds of the other investment banks to euro agree as day additional reserve currency is good for
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the world economy and how do think that effort will affect thero? for them to have a reserve currency there is a lot of work to be done to liberalize the rate to exchange rate to be fully convertible in they will continue to undertake those reforms if they do it you have the illiquid market then countries will use them more extensively as a reserve currency. but it is not a reserve currency but take those steps necessary to get to that point for the foreign exchange regime with
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convertibility. i am all in favor of that reform process and it needs to play a larger role with the regional trade. >> the people's bank of china have fled on financial reform. i think they are right. >> i appreciate the questions being crisp. >> with those policy priorities touching on climate change what monetary tools addressed the climate change problem in do they require coordination on a global scale or with each nation in individual plan to come together?
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>> i am no expert on climate changeçó with no recommendations but we have had success with chargesñi to clean up the air. that has worked pretty well. with that market-based solution with there is the market in chicago that allows you to swap carbon claims for if the country goes in that direction there are a good market approaches to that.çó and if you can develop a global market that would come down across different economies but the prospects i could not say at this
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point. but if countries decide to go it is for capital investment whic&ó is part of the investment. >>. >> it has to do something with the stock. and what we know it in the united states is the percentage of young adults are not qualifiedçó for most jobs it is one of the large jobs. in your work that secular
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stagnation to do with laborñi[ force quality so how would you suggest thinking about the aspect challenge spinnaker with vacuuming capital formation it is;or pretty standard but i do believe the skills and anñ'i acquisition in training is critical to the inability of people then the middle to make progress to deal with globalization itx is very important i was an educator of my wife is an educator.çóñr annette would on secular
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stagnation because we have a skilled labor force with more investment opportunities to get around the problem of stagnation and so is very positive but i am a bit larry because we heard it sometimes 2008 when unemployment was 10 percent i did not think these issues had much to do with when they say it is all supply-side. so my remarks suggest that there is enough demand to be in a full position. as much as it comes from productivity and skills.
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with a sufficient amount of demand. >> just to amplify that last part, back in 2000 we had similar problems so it is hard is to get too far to assess the rule the first you have to get too full of poignant to understand the extent of which people are truly an implacable. - - unemployable. >> i've learned not to say the young man or woman.
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i would make mistakes as finicky mentioned china a little bit to talk about that hot landing in with the people's bank of china white policy which to implement would you recommend other financial institutions? >> i will say a word about the first. china is going through difficult transitions. in then a greater amount of consumption with the greater share of gdp and household welfare. but it is a tricky that
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deals with policy changes:on at the same time y growth is slowing recently. there are issues relating to the banking sector property values not to mention in like the environment it is a complex situation but the chinese government has a lot of resources with a reasonable amount of control in china would have to watch that carefully.
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>> i will do the introduction is. with fiscal and monetary policy with those policies to have the ambitious agenda for stagnating and if that has not filled you up and let me introduce the speakers. >> there first a career is valerie wilson at the program on race and the economy.
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i and the least educated person by far. for better or worse not an economist but no lawyer. to have access and opportunity program can and 11 who used to work for the fed and will soon be professor of economics at dartmouth which she also does not speak for. [laughter] jerry bernstein obviously speaks for somebody as the senior fellow and you already met him. each will speak for five minutes in the reason why that we're rude enough 2.0 if they have hit their limit
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>>. >> before i get started on my remarks thank you for inviting me to contribute to the employment web project allowing me to tb with the speakers this morning i am looking forward to the conversation. talk about the labor market is like a road trip with my two young kids and every couple miles asking are we there yet? [laughter] in the case of the labor of market the issues they refer to has the economy fully recovered? every couple of miles my answer is no, not yet.
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but we get to having more meaningful discussion of what they're should be. going back to my analogy of the road trip taking my kids down to the neighborhood park like busch gardens in williamsburg but it is also quite clear that the payoff is quite different as well. symbol of the of a bite to rko the full employment is the better definition bin full recovery you may ask what's the difference? but the distinction is this. it would return to labor market conditions.
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that depends on 2007 but full employment raises the bar for everyone willing and able to work can get a job. we can debate that but we know from past experience it is possible to get that down as low as 4% without setting off a national crisis. so i will make three points of light is better target than a full recovery and to have full employment. the first reason that full of poignant is better than a full recovery is it means more people with jobs.
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but to change to percentage for its with the national unemployment rate. but as we saw african-american said the largest increase of the employed adults the largest increase of labor force participation and translated 200,000 fewer unemployed african-americans as we saw it fall. paying attention to the slide full employment creates a tighter labor market with a stronger and faster wage growth. showing that average change immediately what should jump out and that is not a good
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thing. because wages are declining. the next point i wanted to make is demonstrated in this slide. so what happens with annual wage growth with that the unemployment rate to show since 1979 wages are more
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responsive to the labor market changes. for example, when the enemy redoubles they declined by eight or 10% from that period of the great recession or recovery but for that 3 percent decline my final play to is a fully implemented is a better target more jobs mean higher wages and that translates into standards. to look over the last four recoveries but to show the
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average household build 60 percent of the distribution of the middle class is extended -- expanded from 1995 has reached exceptionally low levels. so we sought an expansion of the black middle class and the cat the other recovery periods we can see there is a decline in the '80s and with the current recovery. with get 2001 or 2007 period. so to go back to my road trip analogy are we there
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yet? talking full recovery or full employment novi are not there yet. but to get to the destination and payoff is full employment. thank you very much. [applause] >> with the budget and priority website in for those in the back there are seats up front that can vouch for you.
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>> thank you very rich. thank you for letting his participate in this forum for the impact of the criminal justice system on fulham plummeted. also the co-author of the paper who is with the justice policy institute. together reagin our best to document the labor market to make concrete
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recommendations for reform to clear the path of full employment per in the few minutes that i have i will have the key findings. first most people though it has been widely reported that over the last several decades over 40 years we have seen a huge rise in the incarceration rates over the last 30 or 40 years. we incarcerate 2.four hour million people in the prisoner jail and another 5 million are on the supervision or parole or probation that is over 7 million. and every year the cost to the taxpayer exceeds to under $50 billion. given these numbers it is not surprising that large
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numbers of people have a criminal record to i undermine the job prospects. with 70 million adults nearly one out of three you have a serious misdemeanor or felony or restaurant conviction bedded is especially severe for opera but according to "the new york times" poll 34 percent of working age men that are not employed report having been convicted of a crime. if you put that together with the fact nine and 10 major employers conduct criminal background checks taking into account for misdemeanor records then you get a picture of what
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workers are up against when they try to make their way into the labor market. we also know from studies that about 50% of the employers are less likely to interview a candidate with a conviction record compared with identical credentials so it illustrates how these results played out by race. . .
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>> as much a $65 billion in gdp in one year. the big picture that i want to talk about with recommendation. some of the promising solutions we have had a chance to read it. and i would like to mention that there is a ton of momentum, bipartisan momentum between criminal justice reform and this
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includes freedom forum aclu they were all they're talking about criminal justice reform. so we have this very special moment and i will just profile one particular reform and so just after the 9/11 attack, congress passed the terrorism security law and requiring over 2 million workers had to undergo this program, that was implemented by tsa and going back seven years, he or she is disqualified from working in the force. no matter how long, going back
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seven years, that is that, you can no longer be employed at the nation's port. but the union fought hard to include significant worker protections one allowed workers to repeal what our routine inaccuracies and background checks and it's very routine. the other protection allowed workers to petition tsa for what is called a waiver. to demonstrate their rehabilitation, basically. individual information and not just your criminal record. in the end, it turns out that both of these protections were worth their weight in gold especially for what workers of color, tsa granted 87% of the workers they were allowed to
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work despite they had a solid record going back seven years because they were able to reduce evidence of rehabilitation. that was almost 15,000 workers because of that one procedure. and then the tsa also granted 95% of the appeals which saves 50% of the job also inaccurate of how the records are. so as you can see from this next figure, you can see that african-americans african americans were far more likely to petition for waiver or given the disproportionate numbers who have a criminal record, you can see more than 50% of them do apply for the river, they were african-americans. most employers don't follow these and other model worker protections, which is a big reason why so many workers with a criminal record are shut out of the waiver market.
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[applause] thank you. [applause] [inaudible conversations] >> first of all, thank you this is an absolutely crucial topic. i would like to see more discussion debate, decisions that policymakers on fiscal and monetary policy are crucial for millions of americans. so is david said if you can read it is essentially saying that these are just my own view is. and so i have had the privilege of working for ben bernanke.
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and i was an advisor for a couple of years. the major strides that were taken under his leadership, they were really remarkable. on the slide you can see one extra from a statement that the policy committee adopted in 2012, it has been reaffirmed since then. and as the chairman has said a few minutes ago this statement and related policy division says that the fed at that time has really underscored the role of the employment part of the federal reserve's mandate and price stability, those are both important. as has been emphasized those are complementary goals. what you see in this statement is that there is a promise and a commitment that communicate this clearly as possible. and it indicates that the decisions must be informed by the assessment of the maximum
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level of employment. to spend a moment to explain is the maximum level of employment is actually something that economists think of is the balance path of the economy. fiscal policy, regulatory policy can influence it. policy. but the monetary policy basically takes that and tries to help bring the economy back into that path. it's important as we talk about full employment because there are actions that they do to promote bringing this back to the path and then there are actions that other parts of the government can take as well as the private sector to help to raise the level of maximum employment, including the things that murray said about legal reform and protections as well as things that valerie mentioned. but the focus is i have read
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here, it is really focusing on monetary policy. so again as was mentioned in the previous session traditionally economists have assumed for some good reason that the unemployment rate is a good indicator in the shortfall of the economy is from the full employment level that monetary policy can achieve that is associated with a stable low inflation rate. what you see in the picture if this went up from about 5% to around 10% when the great recession hit in its comeback almost all the way back for a longer than normal level. the problem is that again this is what we said, are we there yet? many policymakers and other commentators have said yes and we are actually back to normal and we are starting to normalize this. i will just say that some
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strongly disagree with that and let me show you why. first of all, unemployment is a narrow concept in a way about what the labor market lacks. because it only counts those that are completely out of work and they have searched for a job in the past month. so if you look at this picture it is showing people who are working and they are only working part-time and they are available to work for part-time job and they haven't been able to find one. it seems obvious that we can discuss it and that that is part of the labor market and if you look at the picture that went up a great deal when the recession hit and it's only about halfway back precrisis level. and i think that ben bernanke said that we have made substantial progress in the
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recovery of the labor market but we are not there yet. and it's a really important paper and you can see that it shows in the of the picture that these issues of under employment are very important for people of color and we show the same exact situation. so another issue is the those who are not currently searching for a job, they have given up but they are not unemployable. so without going through the details here, the picture and the bottom line is that there's been some great inflation going on and they have been watching the data the policymakers. saying maybe the people are never coming back. maybe these people are unemployable because they have
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been out of work for so long. and as my wife's wife unemployable just because she's been out of the labor force? actually not. i think danny and i certainly disagree with that. so the gap is big and you can see as emphasized that people in their prime age working years, 30s and 40s and early 50s those people are not retired and not disabled and not in school, many of them are full-time parents and what you can see is that those numbers fell dramatically after the recession and they have not recovered them much. but there has been some good news recently that the participation rates have been coming back and the labor
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market. but it's something that we haven't seen for recovery yet but we should. and until we see these people coming back into the workforce. so finally the implication of this is crucial. we are talking about somewhere between three to 6 million americans who have shortfall in terms of a job in what we consider full-time employment. that means that the true unemployment rate is not 5.5%, it is probably 7.5% or maybe as high as 9% and that also means that we consider ourselves this way and i know david wants to raise this and so i will stop here, and i thank you. >> the first cell on the left is it 3.3? >> 3.3. let me go through this carefully.
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there is a paper and to let so let me just give a brief overview. the first column is the millions of full-time jobs of the shortfall how far away are we from full employment. 3.3 million full-time jobs but under reasonable alternative facts of the labor force participation rate it is actually 6.5 million jobs. it's a large number. >> the difference between the first row in the second row is the second includes those that work part-time and the second is though is that are not in the labor force. >> both of them have the same amount of under employment, i think. they both have the same amount of unemployment and they gave up
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on a lot of individuals and they said they're never coming back. and that's just the last two years we have seen some changes on us. so if you go back then, you get 6 million people instead of three. it is a very important difference. the unemployment rate is the middle column we should really be thinking about this including those that want a full-time job i'm at work and they can't find a full-time job and those who in normal times would be working. somewhere between 7.4 and 9.1. >> the final is what should that be under a policy rule. that suggests to you that it is premature. >> that is right. the benchmark estimates, this is one rule for one debate about this, this is just an example. having this is still appropriate
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today. so if you take the risk maybe they will come back maybe the true unemployment rate is 9% and then it would be really premature to start tightening the policies. >> thank you. let me start with you. so and he used up all your time. [laughter] we used up all your time. [laughter] >> it might be better just leave my part out. but let me give it to you since i worked on it and it has to do with a consumer or producer. i just want to underscore how important a newspaper is as well and there's nothing extraneous at all about this magnitude that she's talking about and that is
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that economic growth can be counted on to share broadly respected prosperity. i think that is very much embedded in our economy these days then ben bernanke alluded to that when you talk about inequality. so each chapter in the book goes through a policy intended to reconnect the incomes of the poor and middle class. and so maybe we can get back to that. the first point is one that underscores this talk which is getting the fiscal and monetary balance correct and i would add
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event in our economy and particularly those of europe, i have three points to make. the first is those of us pulling calling for full employment often talk about monetary and this policy as if they are individually important and they are of course important. especially when monetary policy is to some degree part of this because the fed funds the interest rate that they control and it's down by zero fiscal policy is part of this. it's another thing to induce a man. especially having to do with as an example a restaurant that serves meatballs. as an example. so this brings fiscal policy into the realm and people into the restaurant. so this problem may be an increasing problem going forward meaning that if we want
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to avoid prolonged weakness, fiscal policy will need to step up and there's some of the points made regardless of how low they are giving them hitting the zero lower probability and raising the importance of getting this right. so hitting this three by three grid with the monetary policy and the fiscal policy, with neutral and contraction. you have nine different possibilities there. in recessions and weak recoveries we want to be in box number one. we're both fiscal and monetary policy are pushing in the same direction. i argue that that is where we
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were in 2009 and 2010. in the book i documented these complementarity for actually quite effective with the output and there you really saw the one-two punch of monetary and fiscal working together. the fiscal policy quickly moved us where the fed was in growth mode. the fiscal policy due to austerity was and contraction mode. and this is a point that i said when they were starting 2013. and i know how damaging that was. but now we move to florida where we remain in a growth mode. but this move from seven to four has actually been helpful even just having this from a negative fiscal fiscal neutrality is made a positive difference in growth and jobs. as many are concerned and you've heard this in andes and passion
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speech, that's about as passionate as you're going to hear the feds could potentially move to quick to neutrality. and so it will be a shallow path and will remain data independent but i would like to use it as forward where the fed is on growth and fiscal is on neutral. and there's an interesting taste here and i will stop after this point. one obscurity first struck they were kind of around a seven there. so they were kind of roundness with a contraction mode of fiscal policy and actually when
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they began the fed was kind of in a neutral mode and very much in a neutral mode and this was problematic and pulling back the growth. it's being moved to a growth mode and with the fiscal stall and contraction would austerity occurring, europe remains very much in what it is in. so i think that this shows the one-two punch and we want to weigh in on that. and that includes during his tenure as chair of the fed arguing very much for the fiscal policy. and i will not go into my next chapter because of time constraints, but what i did was to try to wars days and i always give this presentation which is
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you have all these wonderful ideas, but we have a dysfunctional set of politics that doesn't do any of the stuff that you wanted to. but of course getting fiscal policy right depends on a very different than a political actions that we have in place. so i try to keep very carefully about the politics in place. >> thank you very much. [applause] >> this is a bit of a challenge because the papers are so interesting and not quite on the same plane. the trying one question, i want to change to talk about policies you make the point that the unemployment rate of african americans goes up more during the recession and comes down more quickly during a recovery. two questions, why, and is that
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affecting it in greater time or no? >> i think that lie has a lot to do with the fact that they are persistent. so typically the african-american unemployment rate is about double the rate. so when we see things getting worse and because the rate is higher we tend to see more of them increase their and by the same token when things start improving, we start to see it go down faster and a worse we have to go down from a higher point and i think that that disparity has a lot to do with why this unemployment rate moves so much. >> is that getting greater overtime? >> i have not seen that it's getting greater overtime. the to the one has been pretty consistent over time with the greater volatility italy since
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1979 which is the date. >> it seemed to me and i think you're talking about two different sets of policies, once a policy is reducing the number of people that have records so they don't have issues on their employment forms and the second one is what lower the barriers to people who have this because so many people have it. i was startled by a fact in your paper where you said that for african-american working age men that's 25 to 54 years old who are not in prison so again, african-american working age 25 to 55 years old and who are not in prison. okay, can you talk about when you think about policies to address this, what is one policy that you think that would reduce
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the number of people with records and what is the policy that would reduce the barriers beyond. >> that is exactly correct you have to do both and you have to close the floodgates and there's been a lot of work done in that area. the arrests and convictions, i come from california there's a proposition that passed with a ton of bipartisan support and it basically reduces about six felonies down to misdemeanors mostly drug crimes and and then had the effect of reducing the prison population by 50 to 100,000 people. so it's a one-two punch. there's a lot going on in that area and probably the most
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promising reform has been what we call [inaudible] it's about creating a more fair process so that the application stated you don't have to report your criminal record anymore, but employers can ask about it later. the whole challenge, and this is not specific about the record these days but specific to a lot of people who are unemployed, just kidding their foot into the door is a huge thing. all this stuff that makes it impossible to establish who you are the person as opposed to your record or whatever it is and the beauty is that it kind of breaks through that and you have this chance to demonstrate who you are beyond the criminal record. we have 14 states over 100 cities and counties and about 60
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of that did so just the two years. there's a lot of movement in that area. >> you may not get the job, but at least you can get thrown out of the initial screen. >> exactly exactly. >> please go ahead. >> valerie talked about this as we look at the golden era of the mid-to-late 90s. if you go back and look at the newspaper coverage in the late '90s and you notice a couple of things the number of hours in the unemployment rate is getting white low to 4%. and people who are disabled oftentimes some of those people are treated as they are unemployable. and so a friend of a friend says okay, i have someone who
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has a bad back. but they could probably do this job and the employer says that's a great idea, let's see if we can recruit them. okay. so a lot of people who have been disabled, suddenly they were coming back into the workforce and likewise people coming out of prison, those with felony convictions, there's a fascinating article from 1999 or 2000. employment agencies started going to the high-security prisons until he pointed to this
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way a few months ago. so they interviewed these people and the kind of problems that we are in today and that we have in the last two years that is being highlighted i totally underscore and agree with you on. ben bernanke said earlier this morning that there is a demand side in the supply side and if the demand is strong in terms of hiring more workers because they have a lot for their products then people who used to be considered unemployable suddenly become employable. >> end he made this nice distinction and it is largely out of control and we are getting as close to that path as possible. he made the case even more strongly than you did that the unemployment rate and the standard rate is misleading.
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>> so why is that? how do you decide this. >> for example the participation rate is falling a lot. the people that are working or looking for it is falling. it's an overstatement to say all that is cyclical or has to do with a weak economy, a lot of it has do with trends and work patterns, retirement patterns people and their schooling choices, a variety of things. to say that all of that is wrong, on the other hand some of it may be in figuring it out exactly how much is very difficult. likewise we show the part-time work and there's been a big increase. i have no doubt that some of that with lex underemployment,
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but there are changes in the way that we organize the workforce and, you know the way that people interact with the labor market and etc. i'm just saying that there's been a lot of ongoing changes in the workforce and etc. and it just makes it harder than usual to see how much further before you get to valerie's destination. and that is a practical problem for the fed because they do have a dual mandate and they want to figure out how far can they go before they reach a point where further policy would be destabilizing. >> you think that he overstated it? >> he does some interesting work
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and i think in this one as well how much is this slack as defined by india, how much of it affects wages. there's real slack and a large amount of jan amount of it should cause wages to be slack as well. and speaking for themselves, state-by-state there seems to be relationship between how much of this broader measure there is and wage behavior and some have found different result but that is the kind of analysis that you had to do to try to except what is going on. paying attention to wage growth that has been quite weak although equal and so all else equal would suggest that there's a slack in the labor market.
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>> can you summarize what he did with his big step? >> i would like to say that we were relieved and we are very consistent with what we have found and so you can take a look at both of the papers on this question. i agree. but when you say this for the labor force participation we are taking the cbo current 2015. so the 7.5% unemployment that i showed you just using the current state-of-the-art. >> okay the state-by-state level evidence. unemployment does, if it's relatively elevated, it's very
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much like valerie described. it's also the case that part-time employment in a given year that that also advance as wages significantly and if you look at the state-by-state participation rate particularly looking at all the dogs all working age adults, these do seem to be forms that are not just the unemployment rate of people who are completely unemployed and completely out of work and searching for a job.
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>> so one point that we were just talking about. >> i thought that this was a good way to explain these dynamics, the dynamic that we have been talking about which are a critical missing piece of the recovery particularly when you look at populations and if you try to predict on this flat path that is stuck at 2% for five years, if you try to predict that using the unemployment rate you will get a prediction were wages are going up. and you stop that in your
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forecast come you from your going to find that the forecast shows wages should be growing a couple of percentage point faster. what it says it doesn't work anymore, it's over predicting. then you put in the labor force participation. the forecast tracks the way that trends are really tight and that tells you that something about these folks are out of the labor force that are a constraint on wage growth and it underscores the .3 the second point related to that is we are not going to reach disadvantage minorities the long-term unemployment, people with criminal records simply by getting to unemployment and then moving off of it, we need to get to unemployment and stay there for
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the effects and stay there. >> you're not suggesting that all of the decline is reversible by running monetary fiscal policy. >> guest. >> there is an aging of the baby boomers. some is probably persistent with demographics and some is recoverable if we did stronger. >> exactly. none of us are making the does -- assumption. so we are all arguing over three points. i would just say the following that i have looked at all of the compositions in my now i think that may be a point and a half is recoverable. >> let me ask you about the remarks that ben bernanke made earlier. part of what he was saying was
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that there is a limit to what the fed can do because he controls monetary policy in this day, running a current account surplus or these days the germans choose to run a current account surplus other then the g20 meetings, the fed can't do much. you agree with that? >> this is a measly complex discussion and i would say that ben bernanke himself was adamant that the fed should do what it can. but there are situations in which monetary policy is doing everything it can and that may not be enough to quickly get back to full employment. but i think that first law again the analysis that has been done and i stand behind it, in many cases i'm the first
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person who says we are uncertain about this and were not sure how to read it i would stand behind it to say that we think that there is a lot of labor market slack and not a lot of this has been flat at 2%. so we just think it will be premature in normalizing or tightening policy right now. we have seen significant downside risks to the economy and i think some are abroad and frankly this morning the personal consumption expenditure data came out very weak and people are starting to talk about it now which is total output of the economy, that it may be negative. we will see outside of that but of course we have heard that story before and so i would like to see an economy that is resilient enough that we can understand that the economy does not come to a halt.
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>> i disagree a little bit with them. getting to the question that i think you are asking a second ago, which is about what we could and what we should do to push back against and balance. one of the things is there is a strong dollar and it's something like a half point off of gdp growth in the next quarter, that also not a result of currency manipulation but fundamental growth rates that the federal reserve is doing. i agree with your point but to try to put the currency chapter could undermine the deal, although i advocate for trying hard, perhaps we can do it then we need to do something more outside of it then diplomacy. one thing i disagree with is that it is hard for
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noneconomists to distinguish between a central bank policy that is demand management and one that is currency management or manipulation. i think the extent to which you have a large surplus and large amounts of reserve currency is very muchindicator and we have had these in place for a long time and i'm told that they actually work well, they just don't have any ability to enforce any actions against it. so i'm not sure if you want to respond. >> [inaudible] >> not at all. i think that there should be rules that were fair. and that it is the amount that you accumulate. so if you want motivation working elating mess cover your
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debt when your debts are in currencies other than your own you have to you accumulate some multiple of your dad as well. and you're probably outside of the range. but it is those kinds of rules. >> you could be right. we are not talking about this in terms of how much reserves. so there are clearly going to be judgments that are not necessarily distinguishing different motivations for this, for example. >> i was just going to say that i think in principle it is a good idea but i worry that it will kill the deal and that it's harder than what you might think to make that action and a legal document. >> you think that japan is engaging in unfair practices now i'm. >> i don't think they are misaligned.
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>> would either of you like to add anything? any criticisms? >> no, no thank you. >> i hope you follow the spirit that you showed to make your questions known. once you start there and live in. >> okay janet yellen said that she expects the tightening labor market to push inflation back up to 2% and that will probably be important to start with this year. she also says she no longer wants to wait and see wage growth before she makes that and so i was particularly curious. i would love if ben bernanke would answer the question. >> would you like to say something i meant.
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>> i do for the federal reserve, i'm sorry. >> neither do i. [laughter] >> i clearly agree with what he said earlier looking at a lot of different data and different models and different analytical tools i don't want to make this sound trivial. but what she explained in her speech on friday is that there have been significant changes in productivity growth for reasons that we have talked about this morning. and so they are totally out of the fed control technology control, all of these sorts of things. that means that we don't know for sure along this idea of a balanced growth, we don't know what that will be along the path. and so that means that there could be circumstances in which the core inflation and inflation in general comes back up and
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wage inflation is still where it is and points to this structural and regulatory kind of policy that would need to improve the characteristics of it itself, it's not a monetary policy issue at that point. my own concern is exactly what jerrod says, that there is labor markets today it's not a coincidence many forget about wage inflation, consumer price inflation has been running at about 1.5% for several years, the fed has been persistently falling short of the 2% goal. as i said earlier and we have emphasizes for many years, price stability and economic stability are generally complementary. so if we are missing the inflation goal on the downside it may be a time that there is a lot of labor market slack and the only way to get up there is to have this inflation and the
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only way is to maintain this policy longer than we might have thought. >> hello i'm from popular democracy. so i just want to follow up on alexander's point. it seems to me like one of the questions is one of the trade-offs and we didn't talk about whether there's targeted the appropriate goal. it seems to me as though if you're trying to get 2% and you're very scared of overshooting it particularly given that we have been under inflation for the last seven years or something like that. is anyone familiar with any research that suggests that 3% or 4% that it would be negative for the economy. any reason to think that we could not be well anchored out or percent and a stable growing robust economy? because otherwise the trade-offs are unclear. you have a million people.
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>> without speaking but when you were there, why did you go for 2% is it symmetrical if you had to it to do it again would you pick a higher priority remap. >> there is research, most of it gave 2% which is international standard and it is symmetrical. it's a symmetrical target and therefore under shooting, overshooting, it should be fair and balanced. and i do think that you know this is a complicated question of what is the benefit because these are issues that economists need to do more work on. and i would just say the following in that when i was there, we talked about alternatives including gdp targets and things of that sort.
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one is what would you choose if you are starting from scratch and the other is what are the costs of switching the regimes in the middle of a financial crisis. i would just they that deciding not to switch is not the same thing as making a final judgment over which would be the correct framework. we establish the framework based upon what we knew at the time and there is a history which is that inflation has been around 2% and so changing it is a complex process. given all of that we decided not to make changes and i think a lot more work needs to be done and what are the benefits and costs of that. so then you have to take into account not just bad but what is the cost of making a change.
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>> is a paper in your packet by the economist who has written some pieces for the project. and he argues that it would be useful to go about 2% inflation specifically for the kinds of intuitions that i think you were getting at that the fed should allow not just a symmetry but a persistent period above 2% in order to get the unemployment rate down and has also written and you alluded to this in your question, i think it's complicated and i agree with a lot of what was said that you could encourage two three or format. but it doesn't say much so that we can know that much about that. >> please tell us who you are. >> hello, my name is pam harris from the council on education. my question is to valerie.
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as a small housing provider more and more workers are hispanic workers and i'm sure that i'm of them are undocumented. and it has greatly impacted the employment of african-americans in the city and washington and the restaurant and construction business. how is that factored in to your report and how will it impact the overall employment of african-americans once america embraces making these undocumented workers citizens? >> that is a good question. first i would say that that is an issue that has been raised for sometime whether or not increased immigration has resulted in the displacement of african-american workers. the point you make is salient because you're talking about your community and that he. nationally we do not tend to see that as much. in certain communities and areas i know that there are
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those who have that challenge. but on the other side the undocumented workers serve to suppress wages overall those art who are potentially employable. [inaudible] and so there are two sides to this issue. but when we get to a level of unemployment that is closer to full employment we have good examples of going and looking for workers. there is a demand for workers more people will be employed. the challenge that we face is this local level that there's still a lot of slack in labor market. so there are a number of things and legalizing workers helped to raise wages for everyone because
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they no longer have an exploitable workforce and at the same time we need full employment so that we are able to bring unemployment down overall. >> you've been very persistent. >> can you tell us who you are? >> what? >> can you tell us who you are? who are you? [inaudible question] >> in your comments he said the fed would work out or if we have more physical health. physical health is also tax policy and in the last 85 years we've had three major disruptions in our economy the 1981 and 1982 recession and the deep recession which i call the
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great recession in the second great recession in 2008. but there's a similarity between all three of those. that is that we have major tax reductions both in capital gains and the highest rate went down also and so what i'm trying to say as the economy starts out good and and we go to the tax rate for things like that and we have good response to it. but then we leave those in because they are enacting in a recession. and we leave those in because the economy eats up too much. would be better for you in the fed if we reduce the income taxpayers before you raise interest rates. >> thank you.
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>> well it is the goal to to make any fine-tuning changes in the tax code. it is a complicated thing. but i think probably speaking at paying attention to the overall thrust of fiscal policy including the spending side, i want to say that it needs to be symmetrical and the need to pull back his coria and i agree with that. and so i think generally people think that the spending side is more flexible politically and operationally. we have many objectives and goals and one of them should be to try to mitigate that and overshooting. >> can i give you the last word. you are so disciplined. can you tell us how you see the
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politics of better fiscal policy so that we don't always feel incredibly depressed? [applause] >> that's a good question. my book is called the reconnection and i devote the last chapter to thinking about how into politics would we want to be with this thing that i just wrote about for 150 pages which seems like a worthy thing to undertake. i take a lot of solus and encouragement from the fact that these issues between overall growth and shared prosperity is a bipartisan concern i now. there's actually an article that i just read today or yesterday and the time the documents mitt romney a few weeks ago concerns about income inequality, policy rates, the middle class marco rubio paul ryan, they are all talking about this. you can go to a cynical place
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and say it's just politics, and i'm sure there's something to that, but i actually think that there's an underlying demand for the reconnection agenda and our job which i know that we try to do day in and day out at the center, is to separate the wheat from the chaff. what is an agenda that can work in what is one that is just that takes on the words and come quality. so i think with an election coming there's going to be a lot of discussion and we will talk about the kinds of results that we are hearing today will work and will not. >> please join me in thanking all of the panelists here today. [applause]
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>> senator robert menendez indicted by a federal grand jury today on charges of conspiracy to commit bribery. prosecutors say the democratic senator from new jersey used his senate office to help business interests of a friend and donor in exchange for gifts. he was indicted, accused of bribing senator menendez. he's expected to speak to reporters at about 7:00 p.m. eastern time this evening about his indictment and we will have that live for you on our companion network c-span. you're on c-span2 in just a few minutes it is "q&a" with glenn kessler at "the washington post." he's going to talk about his end of year biggest gnocchi oh 2014 awards in his list has list of politicians and political groups that he believes have made the most false claims as of last
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year. >> c-span2 provide live coverage of the u.s. senate floor proceedings and key public policy event. every weekend booktv, now for 15 years the only television network voted of nonfiction books and authors. c-span2 is created by the cable tv industry and brought to you as a public service by your local cable or satellite provider. watch us in hd like us on facebook and follow us on. reporter: . >> coming up the parents of james foley who was beheaded by terrorists last year. and terry anderson who was held hostage for 11 years. here's what he had to say. >> most of you who are not involved do not understand how journalism is working. how we gather information, how
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we choose our stories, how we write them and how we edit them. you don't know the process. but it's pretty reliable. and most of the reporters that i know are doing it not for the money or the fame or the thrills were those that go on to danger repeatedly, they are not there for the adrenaline rush, but they are there because they truly believe that it is important. and that it is important for them to find and tell the truth and that you need to know those
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things. >> in addition to terry anderson, we will hear from the parents of james foley who will was beheaded by isis last year. that is at 9:00 o'clock eastern. >> here are some of our future programs for our holiday weekend on the c-span network. on saturday at 8:00 p.m. texas state senator and editorial candidate wendy davis. easter sunday at 6:30 p.m., jacket was received the congressional gold medal for his contributions for community service.
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and then cornell west on the radical political thinking of martin luther king general. .. ♪

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